Mean Money

Why this 2009 recession feels so much more vengeful than those of the past

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Mean Money

This current recession feels so much more vengeful than those of the past – how is it affecting you? Read on, then tell us your story

-Chris Miles

Recession signsIf you can remember any real excitement about the Spice Girls or the Hansen Brothers when their first albums debuted, this recession is probably your first as a participating, affected adult.

Ignorance is (or was) bliss, of course. Why does this downturn feel more intimate, more vengeful, than other recent recessions?

Two key elements are making this recession so much more personal. At no time in our nation’s history have we had so much of our money tied up in our houses. Falling house prices have squeezed almost everyone, and strangled some. At the same time, the gradual growth of 401ks as our primary way to save for retirement is at an all-time high, with much of those savings invested in the stock market. We know, when we watch the Dow, the Standard & Poor’s 500 and Nasdaq indexes tick down, down, down over a few months, that it means we will be working longer and retiring later than we’d planned.

Each downturn has its own story and personality, and this one is no different. Officially, it started in December 2007 and is now in its 15th month. Triggered by staggering risks taken by financial companies in their mortgage-securities departments, this recession’s drumbeat of awful news pounded the stock market down 50% in the space of a few months, helping to suck $5.1 trillion out of our combined household wealth in the last quarter of 2008, the Federal Reserve said last week.

Here are some clues to understand why this recession feels so different from the deep ones of the mid-70s and early 80s, and the more recent blips in 1990 and 2001.

In deep recessions, jobs suffer. Job losses in the mid-70s and early 80s, in percentage terms, are comparable to what we’re experiencing today. Yet the 2007 economy started out with a bigger work force, so the sheer number of jobs lost is much higher already. In 70s and 80s, soaring energy prices sparked stock market and job declines, but the pain was mostly felt in the U.S. Companies benefited then by still being able to export their products abroad and make money that way. Hiring quickly resumed quickly after the low.

This time around, the world is suffering along with us and net exports are sinking.

The recessions in 1990 and 2001 were shorter and milder. They lasted only about half the time of the earlier two, and the percent of jobs lost was half as much. In 1990, the country was still feeling the effects of another banking crisis, this one caused by real estate investments made by savings and loans. The first Gulf War made the country more skittish and consumers reined in their spending, slowing the economy.

Bets gone bad on technology start-up stocks led to the market bust in 2001, and the economy shed jobs and profits as a result. On September 11, 2001, terrorists used airplanes to attack the country, sending the stock market spiraling further downward.

But the hangover has gotten more severe. Unlike the recessions of the 70s and 80s, job losses continued for 15 months in the 90s and 19 months in 2001. That’s a long time for people to be out of work, to feel the stress of being without a regular paycheck. The average time for hiring to pick up after a recession is just 4.8 months.

Is that extended stretch of job losses a new trend, or will this current recession have more of an average recovery? The longer we must worry about our jobs–and the less money we have to spend–the more “personal” this current downturn will feel.

How is this recession affecting you? Tell us your story of how you are coping. Have you or your guy lost your job? Are your friends or parents having big problems? Please share. Comment below or tell us a longer story of your recession experiences by writing to us at

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0 thoughts on “Mean Money

  1. As a baby boomer, I have lived through all the recessions this article references, but this is the first one in which I feel so much of a pinch. As a contractor, many of my clients have pulled back. I think what really has me worried, though, is how many companies seem to be fabricated by greed and abuse of their leaders, with corporate directors and government regulators turning a blind eye. It’s one thing to get sucked down by some cyclical force, but to be duped and cheated is what makes this recession feel more personal to me.

  2. I feel we are facing a sea-change in how American business and politics function. Even when we recover from this economic crisis, the American landscape will look quite different, and that makes this recession disorienting, and personal.

  3. i must say that as a semi gen y-er i am feeling this recession hit alot bigger than the ones of the past. it’s a cruel beotch and better end soon.

  4. I love how everyone wants to blame Wall Street for everything. “Triggered by staggering risks taken by financial companies in their mortgage-securities departments…” In fact, this recession was triggered by Main Street too! There were tons of very smart (and very dumb) people out there who took on loans they KNEW they couldn’t afford. It’s very easy to blame the banks and then look to Uncle Sam for the bail out, but the truth is Americans (at banks and in their own homes) were making very risky decisions all around.

    Also, let’s be honest here, our government has NO IDEA how to fix the problem. The stimulus plan is a joke and Obama is WAY over his head, being pushed around by Pelosi into making terrible decisions.

    Unfortunately, I think things are going to get worse before they ever get better.

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